The relationship between China and Canadian business is a complex one. Rising wages and a swelling Chinese middle class will fuel demand for Canadian products and commodities. However, rising wages in China’s manufacturing sector and increased fuel costs will also increase the price of Chinese imports for Canadian companies who have outsourced their manufacturing to one of Guangdong’s many factories.  That puts pressure on Canadian importers and retailers.

In either case – whether exporting consumer goods to China or outsourcing manufacturing to China – intellectual property rights (IPR) are critical for Canadian companies.  Recent reports suggest an encouraging trend:

The “Intellectual Property Tribunal” of the Supreme People’s Court of the P.R.C. has seen a surge in IPR cases in recent years. In 2010, over 1,000 foreign-related cases of IPR infringement were heard, but this number is a small fraction of the 40,000 IPR cases involving Chinese entities. IPR cases involving foreign companies appear to have success rates of about 50%. And 2010 statistics also show an increase in efficiency in handling IPR cases despite the surge in filings. All this is likely driven by the government’s high-profile campaign against IPR violations, including against online piracy. This suggests two things:

• The government (for its own purposes) is encouraging IPR enforcement, and domestic entities are taking advantage of the legal system in increasing numbers for IPR enforcement. Domestic entities wouldn’t be rushing to the local IP Tribunal unless they had some confidence that the process was worth pursuing. 
• Foreign entities don’t appear to be suffering any disadvantage or enjoying any advantage. Their claims are being processed along with those of their domestic counterparts – which is how a dispassionate legal system should work. 

IPR enforcement in China has come a long way, but it still has a long way to go. If you are doing business in China, get access to experienced legal counsel – in both Canada and the PRC – for trade-mark protection, trade-secret and patent protection, licensing agreements and manufacturing agreements.

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